Question: QUESTION 2 On 1 July 2019, Black Ltd leased a coffee making machine from Roast Ltd. Roast Ltd had purchased the machine on that day

QUESTION 2 On 1 July 2019, Black Ltd leased a coffee making machine from Roast Ltd. Roast Ltd had purchased the machine on that day for its fair value of $197 541. The lease agreement contained the following provisions: 3 years $50 000 $53 000 Lease term Initial payment on 1 July 2019 Annual rental payment, in arrears (three payments commencing 30 June 2020) Residual value at end of the lease term (Proportion of residual guaranteed by the lessee) Interest rate implicit in lease $20 000 (100%) 7% The lease is cancellable only with the permission of the lessor. The expected useful life of the machine is 4 years. Included in the annual rental payment of $53 000 is an amount of $3 000 to cover the costs of maintenance and insurance paid for by the lessor. REQUIRED a. Provide journal entries for the year ending 30 June 2020 as shown in the books of Black Ltd (the lessee) in accordance with AASB 16 Leases. Exclude journal narrations. (9 marks) b. Provide journal entries for the year ending 30 June 2020 as shown in the books of Roast Ltd (the lessor) in accordance with AASB 16 Leases. Exclude journal narrations. (7 marks)

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